A cross section of leaders of business
associations have asked the government to make clarification about new business
licensing regime expected to start 1st January 2012.
According to The Finance ACT 2011, from 1st
January 2012 all businesses across Tanzania are supposed to apply for new
annual business licences.
This is to enable the local government authorities
up their finances and raise billions for taxman, according to the 2011/12 budget
read by Finance Minister Mustafa Mkulo last June.
Leaders of business associations want the
Ministry of Finance and Economic Affairs, Ministry of Industry, Trade and Marketing,
and Ministry of Regional Administration and Local Government Authorities that
are involved in the exercise, to issue a directive on how the new licensing
regime will be implemented without adversely affecting the business environment.
“We don’t want the return of nuisance
tax and destruction of the long fought for improved business environment,” said
Vibindo Society chairman, Kikuwi Gaston. The society represents over 400 small-scale
traders.
Private Sector Foundation (TPSF)
chairperson Esther Mkwizu says the private sector is seeking audience with the
government to renegotiate the new licensing regime.
Richard
Rugimbana of Tanzania Confederation of Tourism (TCT) is of the opinion that for
tourism industry the new general licensing regime should not apply to tourism
industry, which already pays too many taxes and has to pay annual licences to
Tanzania Tourism Licensing Board.
The government is being accused of not
having offered any guidance on the issue, despite January first being at hand.
According to Finance Act 2011, local
government authorities are supposed to make new bylaws to charge business
licences fees. Business actors across the country are most likely not aware of
the new development.
Concerns of business leaders
Business leaders fear that local government authorities will not go by
figures proposed by the Finance Minister in the 2011/12 budget speech, rather
they will charge more as the Finance Act does not put any cap on the amount
they can charge.
They are also concerned that the government
has not issued an inter-
ministerial directive (Finance, Trade, Local government etc) to
business community on how the proposed new licensing regime will be implemented. This will leave businesses at the mercies of
local authorities, and could destroy all gains in business environment.
Annual licences were cancelled some years ago
as they were considered a nuisance tax. Will they this time not be a nuisance
tax? Business leaders want the
government to give assurance the new regime is not a return of nuisance tax.
To get a business licence, most entities
have to get tax clearance certificates from Tanzania Revenue Authority, which
complicates the process. Often for some
business to get tax clearance certificate from TRA, you have to pay some tax in
advance, and business leaders feel this is cumbersome.
They also see the new licensing regime as
compounding the many existing taxes/levies/fees and makes business environment
less conducive. Lack of awareness among
many operators will cost them in terms of penalties imposed for failure to get
the annual licence, they also argue
The Finance ACT 2011 introduces annual
business licences as from 1st January 2012. This was made possible by the act amending THE
BUSINESS ACTIVITIES REGISTRATION ACT, (CAP. 208), which originally provided business licences valid for the entire life of the a registered
entity.
The Finance Act 2011 became law on 28th
June 2011, when the President assented to it.
Earlier, on June 8th 2011, Finance Minister in
the national budget for 2011/12 had proposed
The Business Licensing Act ( has been replaced by THE BUSINESS
ACTIVITIES REGISTRATION ACT), would be amended to impose business license fees
for all businesses (except hard drinks) as follow – town areas Tsh 50,000, District Councils – Tsh 30,000
and Village Councils – Tsh 10,000.
Subsequently,
The FINANCE ACT 2011 amended The Business Activities Registration Act and The
Local Government Finance Act. The amendments in the two acts allow charging
business licence fees, but don’t indicate the figures proposed by the finance
minister.